Talks break off on railroad deal, but door not closed

The Great Smoky Mountains Railroad and Jackson County reached an impasse on an economic development agreement last week after two years of negotiations.

The deal would have provided the scenic passenger train with $700,000 to help it expand its offerings in the town of Dillsboro, and in turn pump money into the county’s tourism economy.

The railroad sent a letter to the county last Thursday thanking county leaders for the time and energy spent trying to broker a deal, but “postponed” moving forward. The county promptly replied with its own statement, in turn thanking the railroad but agreeing it was best to call off talks for now.

Al Harper, the owner of the Great Smoky Mountains Railroad, said he holds out hope the county and train could try again to strike a partnership in a year or two.

“I am disappointed it didn’t work out,” Harper said.

Harper cited two key reasons for why he pulled out of negotiations.

“The first thing was it created quite a storm,” Harper said. “That bothers me.”

The train deal was lambasted by some members of the public as a giveaway to a private business that was not properly vetted. If Jackson has $700,000 to put on the table for economic development, was a deal with the train truly the best option or just the bird in the hand?

Without full buy-in from leaders, Harper didn’t want to move forward under the cloud of controversy.

But the real rub seems to revolve around the county’s request that Harper provide records and statements detailing the railroad’s financial position. Harper said if he turned over his books to the county, he feared they would become public record, open to all to see.

“I don’t need people to me judging me on how to run the railroad,” Harper said. “I don’t want to get into a position where every naysayer has the opportunity to take shots at my financial statements.”

Commissioner Charles Elders, a staunch proponent of making a deal with the railroad, remained optimistic some sort of negotiations could be reached in the future. But he said he was surprised the train would not hand over financial reassurances.

“I thought things were going really smooth,” Elders said. But, “Just like going to the bank to borrow money, they’re going to require financial statements and collateral, and we need to do the same thing.”

He said the requests of the county were meager compared to the benefits that would be realized to the town of Dillsboro and the extra $700,000 the railroad would get to invest in its infrastructure. He was disappointed train officials wouldn’t meet the county halfway.

The railroad, for now, will focus on its investments in nearby Bryson City, Harper said. Swain County gladly offered the railroad a $600,000 grant to restore a steam engine, in hopes to boost ridership and in turn bring more tourists.

Had Jackson pitched in, it would have gotten in on the action as well. The railroad promised it would originate half its steam engine trips out of Dillsboro instead of concentrating them in Bryson City.

Put plainly, County Commission Chairman Jack Debnam said furthering the deal at this point would be contingent on the train’s cooperation. Without financial reassurances, Debnam said the county had no way of knowing whether the railroad even had the wherewithal to perform the promised work.

“That does turn us off,” Debnam said. “We’re not closing the door on the railroad, but part of opening it back up is going to be a release of financials.”

As much as the shop owners in Dillsboro wanted the county to help bring economic activity to the area, Debnam said commissioners must be stewards of public funds.

“It was surprising, it really was, that us asking for that was really a big issue,” Debnam said. “I know it’s a disappointment.”

County Manager Chuck Wooten said the lack of financial disclosure from the railroad halted a deal that was still far from being hashed out. Wooten said the commissioners had never officially voted on the matter and the county had run into other setbacks.

One of those was what the county would be offered as collateral should the railroad not live up to its end of the bargain. The railroad had offered property it owns near Dillsboro, which the train has said was free and clear of other encumbrances and could be used as collateral. But research by the county’s attorney uncovered that it was not in fact free and clear — namely due to a $7.5 million loan from the Federal Railway Administration taken out by the railroad in 2005 for track improvements. The property was already tied up as part of the collateral for that loan.

Secondly, the property where the turntable was planned has a mortgage lease on it.

Both of those issues could most likely be resolved as talks continued, Wooten said, however, the train’s refusal to open its books put a wrench in the spokes. He said the county has protocol that it has used in the past for administering economic development loans.

“We believe we have a procedure in place we would want to follow,” Wooten said.